Local stocks are seen to trade with bias on the upside this week on hopes for the reopening of the global economy given recent progress on coronavirus (COVID-19) vaccine tests.
Last week, the main-share Philippine Stock Exchange index (PSEi) gained 180.82 points or 2.9 percent to close on Friday at 6,372.66 on news of positive results of early tests on the COVID-19 vaccine being developed by pharmaceutical giant Pfizer and biotech firm BioNTech. “Progress in the pursuit of a vaccine against COVID-19 has provided a lifeline for the Philippine market. The PSEi managed to bounce off its 50-day exponential moving average early last week and could have enough momentum to have a positive bias this coming trading week,” said Jose Vistan, head of research at local stock brokerage AB Capital Securities.However, Vistan said upside might be limited to the 6,500 level given that the “dreaded” second quarter earnings reporting season was just around the corner. Recent lockdown measures meant to curb the COVID-19 pandemic were expected to extract the heaviest toll in the second quarter.Vistan sees key support for the index at the 50-day average of 6,090.Jonathan Ravelas, chief strategist at BDO Unibank, said the equities market had risen on expectations that the economy would be opened further. He also noted improvements on economic data, with June manufacturing purchasing managers’ index (PMI) inching toward the 50 break-even mark.Last week’s close at 6,372.66 highlighted a strong support at the 6,000 levels, Ravelas said.
“Expect continued consolidation within the 6,000 to 6,500 levels in the near-term. But lookout for a break above the 6,500 levels as it could call for a retest of the 6,800 to 6,900 levels,” he said.In a research note issued last week, First Metro Investment Corp. said the PSEi had benefited from the opening of most areas in Luzon, with the transition from enhanced community quarantine to general community quarantine.“Improving investor sentiment in both the Philippines and the United States will further help the PSEi back to bull territory by third quarter,” FMIC said.In the first semester, the PSEi dropped by 20.6 percent. Quarter-on-quarter, however, it rose by 16.7 percent. It has rebounded by 34.3 percent from its lowest closing for the year of 4,623.42.Daily average trading value turnover was P6.59 billion at the end of the first half, down by 15.9 percent from a year ago. Foreign funds were net sellers at P68.44 billion in the first half, a reversal of the P21.26 billion net foreign buying a yer ago. “Foreign funds have left emerging markets including the Philippines as a result of the health and economic crisis caused by COVID-19 … Fortunately, local investors took over the buying momentum and kept our market resilient. In April and June, we noted that locals were responsible for 53 percent and 58.9 percent of value turnover,” PSE president Ramon Monzon said.—Doris Dumlao-Abadilla INQ